KLBF Flat Growth Ahead 2018504 NHKS Company Report (English)
Growth of 2.4% in Sales KLBF’s sales grew by 2.4% from IDR4.89 trillion in 1Q17 into IDR5.01 trillion in 1Q18. The growth was boosted by the sales growth of 3.6%, 2.1%, 2.8%, and 0.5% respectively posted by the prescription drugs, the nutritional food, the distribution, and the consumer health.
Last Price (IDR) 1,515 Price date as of May 02, 2018 52 wk range (Hi/Lo) 1,785/1,400 Free float (%)
43.3 Outstanding sh.(mn) 46,875 Market Cap (IDR bn) 78,750 Market Cap (USD mn) 5,800 Avg. Trd Vol - 3M (mn)
21.49 Avg. Trd Val - 3M (bn)
35.44 Foreign Ownership 18.1%
Consumer Specialty Pharmaceutical & Nutritional Product Bloomberg
KLBF IJ
Reuters KLBF.JK Joni Wintarja
The target price implies a 2018E P/E of 32.3x. Now, KLBF is traded at a discount of a 2018/E P/E of 28.3x.
Target Price of IDR1,730 We use an estimate of forward of P/E of 30.8x (the 3-year average) as the basis of valuation method for obtaining the target price of December 2018.
Lowest Sales Growth by the Nutritional Food Based on the Nielsen Retail data, the sales volume of dairy powder in Indonesia edged down 2.5% from 203 million tons in 2016 into 198 million tons in 2017. We estimate that the downtrend likely impacted on the nutritional food. Of note, the nutritional food posted the 1Q18 growth of 2.1% the last-5-year-lowest growth. Partnership Obligatory Based on the government regulation Number 26/Permentan/ PK.450/7/2017 Article 23 & 24 on Dairy Supplies and Distribution, the producers of processed dairy products are obligated to build the partnership with farmers, farmers groups, and or cooperatives with a view to making use Local Fresh Dairy appropriate to the real production capacities. The regulation likely sends KLBF’s capex to soar and lower its gross margin.
- 62 21 797 6202, ext:138
EBITDA 3,382 3,608 3,697 3,884 Net profit 2,300 2,404 2,511 2,639 EPS (IDR)
3M
Joni.wintarja@nhsec.co.id
Kalbe Farma, Tbk | Summary (IDR bn) 2016/12A 2017/12A 2018/12E 2019/12E
Sales 19,374 20,182 21,034 21,926
Sales growth 8.3% 4.2% 4.2% 4.2%
Abs. Ret. -10.4% -1.9% -8.7% 0.0% Rel. Ret. -5.0% 1.7% 0.6% -5.9%
12M
1M
49 51 54 56
Share Price Performance YTD
Dividend yield 1.3% 1.5% 1.5% 1.6% Source: Company Data, Bloomberg, NHKS Research
19 22 23 24
NPM 11.9% 11.9% 11.9% 12.0% ROE 19.7% 18.2% 17.2% 16.4% ROA 15.9% 15.1% 14.4% 13.8% ROIC 18.8% 17.7% 16.6% 16.7% P/E 30.9x 29.5x 28.3x 26.9x P/BV 5.7x 5.1x 4.6x 4.2x EV/EBITDA 20.4x 19.2x 18.6x 17.5x DPS (IDR)
17.5% 17.9% 17.6% 17.7%
Please consider the rating criteria & important disclaimer Company Report | May 04, 2018 Kalbe Farma Tbk (KLBF) Flat Growth Ahead Hold Dec 2018 TP (IDR) 1,730 Consensus Price (IDR) 1,647 TP to Consensus Price +5.0% vs. Last Price +14.2% Shares data
EPS growth 14.7% 4.5% 4.5% 5.1%
BVPS (IDR) 266 296 328 360 EBITDA margin
A Glance at KLBF Established in 1966, KLBF has marked a tremendous development from a modest business in a garage to the leading pharmaceutical producer in Indonesia. Not only does KLBF penetrate into ASEAN, Nigeria, and South Africa’s markets but it also becomes a national-health-product producer competently competing in the export market.
Undergoing an organic growth, mergers, and acquisitions, KLBF has grown and transformed into an integrated-health-solution provider through its four business groups: the Prescription Pharmaceutical Division (23% contribution), the Consumer Health Division (17% contribution), the Nutritional Division (29% contribution), and the Distribution and Logistics Division (30% contribution).
KLBF’s Competitiveness in the Asia Pacific KLBF has the fourth-biggest dividend yield after China Medical System Holding, Shenzen Salubris, and Zhejiang. Although it has the lowest net profit margin, it has a high ROE reaching 17.2%. Its relatively high valuation makes it a top pick if any price correction is carried on further.
Asia Pacific Pharmaceuticals Market Total Asset Net Profit Net Profit Company Cap ROE P/E P/BV Dividend (USD mn) Growth Margin Yield (USD mn)
KALBE FARMA 4,953 1,223 4.5% 11.9% 17.2% 28.3x 4.6x 1.5% KIMIA FARMA 839 449 22.2% 5.3% 13.8% 35.9x 4.7x 0.8%
India
CIPLA LTD 7,232 3,230 7.2% 8.4% 47.8x 3.8x 0.3%
- 26.0% PIRAMAL ENTERPRISES LTD 6,848 7,437 38.4% 22.9% 9.0% 35.0x 2.9x 0.8% AUROBINDO PHARMA LTD 5,424 2,505 13.7% 15.5% 27.6% 15.7x 3.9x 0.6% DR. REDDY'S LABORATORIES 5,219 3,389 -43.5% 8.5% 9.6% 29.0x 2.8x 1.0% TORRENT PHARMACEUTICALS LTD 3,520 1,561 -46.1% 15.9% 23.8% 25.1x 5.4x 0.9%
China
SICHUAN KELUN PHARMACEUTIC-A 7,694 3,373 65.0% 6.7% 3.7% 51.8x 4.1x 0.4% TASLY PHARMACEUTICAL GROUP-A 7,648 3,309 17.4% 8.7% 16.5% 34.1x 5.4x 1.2% ZHEJIANG NHU CO LTD-A 6,854 1,644 132.0% 27.8% 15.7% 13.9x 4.5x 1.7% SHENZHEN SALUBRIS PHARM-A 6,759 1,055 5.4% 35.6% 24.4% 28.7x 6.7x 1.7%
Hong Kong
CHINA MEDICAL SYSTEM HOLDING 6,160 1,560 21.7% 31.3% 24.8% 23.4x 5.4x 1.7% LUYE PHARMA GROUP LTD 3,605 1,654 10.1% 25.7% 14.9% 23.2x 3.4x 0.9%
South Korea
HANMI PHARM CO LTD 4,885 1,556 1077.2% 6.6% 8.7% 87.2x 7.2x 0.1% YUHAN CORP 2,593 1,962 7.5% 6.7% 24.2x 1.6x 0.8%
- 32.3%
Bangladesh
SQUARE PHARMACEUTICALS LTD 2,712 652 15.6% 29.1% 23.7% 21.2x 4.6x 1.1% Source: Bloomberg, NHKS research
Performance Highlights KLBF Sales Breakdown | FY2017 KLBF Gross Profit Breakdown | FY2017
Source: Company, NHKS Research Source: Company, NHKS Research
Nutritional Food y-y Sales Growth | 2014 - 2018 Distribution y-y Sales Growth | 2014 - 2018
Source: Company, NHKS Research Source: Company, NHKS Research
Prescription Drugs y-y Sales Growth | 2014 - 2018 Consumer Health y-y Sales Growth | 2014 - 2018
Source: Company, NHKS Research Source: Company, NHKS Research
Multiple Valuation Forward P/E band | Last 3 years Dynamic Forward P/E band | Last 3 years
Source: NHKS research Source: NHKS research
Rating and target price update Target Price Revision Date Rating Target Price Last Price Consensus vs Last Price vs Consensus
05/10/2017 Buy 1,860 (Dec 2017) 1,515 1,695 +22.8% +9.7% 09/18/2017 Buy 2,020 (Dec 2018) 1,725 1,812 +17.1% +11.5% 12/15/2017 Buy 2,020 (Dec 2018) 1,695 1,711 +19.2% +18.0% 05/04/2018 Hold 1,730 (Dec 2018) 1,515 1,647 +14.2% +5.0%
Source: NHKS research, Bloomberg
Analyst Coverage Rating Closing and Target Price
Source: Bloomberg Source: NHKS research
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1. Period: End of year target price
2. Rating system based on a stock’s absolute return from the date of publication Buy : Greater than +15% Hold : -15% to +15% Sell : Less than -15%
Summary of Financials
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